Diligent reports revenue growth

Diligent Corporation ("Diligent" or the "Company") (NZX:DIL.NZ - News), the Software-as-a-Service (SaaS) based platform for the secure electronic production, distribution and collaboration of confidential information to boards, committees and leadership teams, today announced financial results for the second quarter and six months ended June 30, 2015.

Brian Stafford, President and Chief Executive Officer of Diligent, said, "We are building solid momentum in the core business; we had a strong second quarter, highlighted by revenue growth which exceeded the top end of our guidance. We had our best quarter in new sales in two years both overall and in the Americas, driven by continued strong demand for Diligent Boards and improved execution on our growth initiatives. Based on our results for the first six months of 2015, and our new business pipeline, we are raising our full year 2015 revenue growth outlook. We are also pleased about our progress on Diligent Teams, which is ready to go into a Beta phase, and we are excited to announce a new D&O product module that we will begin selling in Q3. Looking forward, we are making good progress but we still have a lot of opportunities to increase our level of execution and I am confident that we will continue to build momentum and further capitalize on our leading market position."

Second Quarter 2015 Financial Highlights

- Revenue: For the quarter ended June 30, 2015, total revenue was $US 24.1 million, an increase of 18.5% compared with $US 20.3 million in the prior year. Diligent’s reported revenue in the quarter was negatively impacted by $US 1.0 million due to the strength of the U.S. dollar as compared to most non-U.S. currencies in which we operate, consequently Diligent generated 23.4% constant currency revenue growth compared to Q2 2014.

- Gross Profit: Gross profit for the second quarter was $US 19.2 million, an increase of 20% compared with $US 15.9 million in the prior year. Gross margin was 79.5% compared with 78.4% in the second quarter of 2014.

- Adjusted EBITDA: For the quarter ended June 30, 2015, Adjusted EBITDA was $US 6.1 million, an increase of 3% compared with $US 5.9 million in the prior year. Adjusted EBITDA margin was 25.3% compared with 29.1% in the prior year.

- Net Income: For the quarter ended June 30, 2015, net income was $US 1.8 million compared with $US 2.5 million in the prior year. Diluted earnings per share were $US 0.01, compared with $US 0.02 in the prior year.

Adjusted Net Income for the second quarter of 2015 was $US 3.0 million compared with $US 3.5 million in the prior year. Adjusted Net Income per diluted share was $US 0.02, compared with $US 0.03 in the prior year.

- Balance Sheet: As of June 30, 2015, Diligent had $US 64.3 million in cash and cash equivalents and no bank debt, a decrease of approximately $US 1.0 million as compared to the cash and cash equivalents on March 31, 2015.

Second Quarter Business Highlights

- Client Agreements and Diligent Boards Users: As of June 30, 2015, total client agreements were approximately 3,350 (net of cancellations). During the second quarter of 2015, the number of contracted Diligent Boards users increased to over 100,000 users.

- Revenue Retention Rate: In the second quarter, Diligent’s annual revenue retention rate, including upsells into the existing customer base, exceeded 100% . Diligent’s annual revenue retention rate, excluding upsells into the existing customer base, continued to exceed 95% .

- Product Enhancements: During the second quarter, Diligent productized a new Directors and Officers questionnaire module on the core Diligent Boards platform. The company plans to begin selling the D&O module in September of 2015.

Half-Year 2015 Financial Highlights

- Revenue: For the six months ended June 30, 2015, total revenue was $US 46.9 million, an increase of 19% compared with $US 39.5 million in the prior year. Diligent’s reported revenue for the six months was negatively impacted by $1.7 million due to the stronger U.S. dollar, while Diligent generated a 23.2% constant currency revenue growth rate compared to the first six months of 2014.

- Gross Profit: Gross profit for the six months ended June 30, 2015 was $US 37.6 million, an increase of 20% compared with $US 31.3 million in the prior year period. Gross margin was 80.1% compared with 79.3% in the prior year.

- Adjusted EBITDA: Adjusted EBITDA for the six months ended June 30, 2015 was $US 13.4 million, an increase of 9% compared with $US 12.3 million in the prior year period. Adjusted EBITDA margin was 28.6% compared with 31.2% in the prior year.

- Net Income: For the six months ended June 30, 2015, net income was $US 4.9 million compared with $US 4.4 million in the prior year. Diluted earnings per share was $US 0.04, compared with $US 0.04 in the prior year period.

Adjusted Net Income for the six months ended June 30, 2015 was $US 7.1 million, compared with $US 7.2 million in the prior year. Adjusted Net Income per diluted share was $US 0.06, compared with $US 0.06 in the prior year.

- Cash Flow: The Company used $US 0.5 million in cash from operations and invested $US 4.8 million in capital expenditures, including capitalized software development costs, for the six months ended June 30, 2015. For the six month ended June 30, 2014, cash provided by operating activities was $US 9.3 million and capital expenditures were $US 2.7 million.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Financial Outlook

As of August 11, 2015, Diligent is initiating revenue guidance for the third quarter 2015, increasing revenue guidance for the full year 2015, and reiterating adjusted EBITDA margin guidance for the full year 2015 as follows:

- Third Quarter 2015: The Company expects revenue to be between $US 25.3 million and $US 25.6 million, or an increase of 19% at the midpoint of the range.

- Full Year 2015: The Company is increasing its annual revenue guidance to between $US 98.5 million and $US 99.2 million, or an increase of 19% over full year 2014 at the midpoint of the range, compared with the prior outlook for revenue of between $US 97 million and $US 99 million. Diligent continues to expect adjusted EBITDA margin for full year 2015 to be between 24% and 26%.